In recent years, diversification has been considered a cornerstone of investment strategy, for a good reason. By spreading assets across a range of different investment types, sectors, and geographies, an investor can mitigate risks by minimising the impact of an asset's poor performance. But the question is, does this always work as intended?
The main argument for diversification is that it helps to reduce risk. By investing in a range of different assets, an investor can ensure their portfolio is not overly exposed to a sector, region, or type of investment. This can help to reduce the impact of market volatility and potentially protect against losses.
